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UK Mortgage Approvals Hit Record Low

UK mortgage approvals declined unexpectedly to a record low in May as coronavirus pandemic weighed on housing market activity, data published by the Bank of England showed Monday.

The number of mortgage approvals for house purchase fell to a new series low of 9,273 in May. This was almost 90 percent below the February level and around a third of their trough during the financial crisis in 2008.

Economists had forecast approvals to rise to 25,000 from 15,851 in April.

Secured lending rose GBP 1.2 billion in May, which was slightly higher than the GBP 0.0 billion in April but weak compared to an average of GBP 4.1 billion in the six months to February 2020, the BoE said.

Data showed that household's consumer credit borrowing remained lower than usual in May, as Covid-19 continued weighing on spending.

Consumer credit decreased by GBP 4.59 billion compared to a fall of GBP 7.4 billion in the previous month. On a yearly basis, consumer credit dropped 3 percent, the weakest since the series began in 1994.

Further, private sector businesses borrowed a total of GBP 11.4 billion from banks and financial markets in May, following strong borrowing of GBP 14.0 billion in April. The strength in May was driven by borrowing from banks by small and medium sized businesses.

The monetary aggregate M4 logged a monthly growth of 2 percent versus a 1.5 percent increase in April. The annual growth improved to 11.9 percent from 9.5 percent.

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